CSES in Media

Kerala may lose Rs 16,000 crore funds

This Report on the CSES Study was published in Deccan Chronicle on 08.04.2018

Kerala is set to lose a whopping Rs 16,000 crore if the 15th Finance Commission had its way and punished the state for its gains on social indicators. The commission’s controversial terms of reference (ToR) suggests the use of 2011 census while deciding the share of states in central funds. Research by Dr K.K. George and Dr K.K. Krishnakumar of the Kochi-based Centre for Socio-Economic and Environmental Studies (CSES) showed the state losing Rs 7,800 crore on the population share.

The study, titled Terms of Reference of the 15th Finance Commission; Implications for Kerala, also apprehends losing another Rs 8,200 crore as it has made no specific reference to the weightage to be given for management of ecology, environment and climate change.  The silence is a departure from the 13th and the 14th commission awards. Changing the population reference period, they say, goes against the assurance in the Parliament to encouraging control of the population a national goal then and also now.

“Kerala will be the second highest looser on this account with Rs 7,800 crore during the five year period,” the study said.  Tamil Nadu is the topper on the list with a loss of more than Rs 10,000 crore while major gainers are Uttar Pradesh, Rajasthan, Bihar and Madhya Pradesh. Another area of concern is the lack of clarity on the issue of allocation taking into account ecological concerns.  The study says the 13th Finance Commission, for the first time, was asked to examine the needs of states to manage ecology, environment and climate change consistent with sustainable development.

This has been continued in ToR of the 14th FC, and they earmarked 7.5 percent of the tax share for this.   The criterion used for horizontal sharing among the states was the share of each state in the forest area.   Kerala has received 2.76 percent of the total share under this which has been computed to about Rs 8,200 crore.

This item is not shown as a separate one in the ToR of FC 15 unlike in the last two. The authors felt that “by giving less importance by way of not giving a separate item in the ToR, the States including Kerala have reasons to be apprehensive about the financial allocation to States on this account.  In that case, Kerala will be losing a minimum of Rs 8200 crore.”